Last week, I had the privilege of teaching 4th graders about entrepreneurship. The event was organized through a magnificent organization, Junior Achievement. The high point was playing the hotdog stand game. Students operate a hypothetical hotdog stand and learn about revenue, expenses, and operating a business.
After the game, we discussed competition. I asked the young entrepreneurs, “What if another vendor started selling hotdogs at a lower price?” At least five young entrepreneurs said, “Sell it for the same price,” or “Sell it for less.” The knee-jerk response was to lower the price. Finally a young entrepreneur intervened, “If your hotdog is better, you don’t have to lower your price, right?” She nailed it.
If you have a better hotdog, you don’t need to be the cheapest. A better solution should sell for more. Yet salespeople and managers will have the same knee-jerk response to lower the price. Too many salespeople discount without challenging the customer. Too many managers approve discounts without challenging the salesperson. They both give a similar knee-jerk response in a competitive selling environment. Discounting has become a habit.
Salespeople everywhere can learn from this young entrepreneur. If your solution is better, you don’t have to lower your price. All you have to do is…
Clearly define your meaningful difference
Telling a customer your service is better is not a meaningful difference. Telling the customer your people are better is not a meaningful difference. A customer has to perceive a difference that is more compelling than a generic promise. There is no meaningful difference if your competitor can make a similar claim. Prove your differences and clearly define what that difference is worth to the customer.
If you can’t define your meaningful difference, ask your prospect to define the difference. Ask the prospect, “What can we do differently than every other company?” By answering this question, the prospect admits they are not completely satisfied. This question creates distance between you and the competition.
Your existing customers are also a great source of information. Ask your existing customer “What can we do better?” By asking this question, you identify an unfulfilled need. This question will help you create more value for your existing customers. You also neutralize your competitor’s attempts to differentiate their solution. It is better if you identify this unfulfilled need rather than your competition.
When a competitor offers a cheaper hotdog, you don’t have to lower your price. You can be different in a meaningful way. A meaningful difference is worth more than a cheap price.
In this scenario, it is okay for salespeople to think and act like a 4th grader.